Issues in the Labour Market: Transitions

Transitions: Next Steps

Youth face many challenges trying to find work, and attaining a certain level of education or certain skills will only get them so far. Not only do skills training programs need to do a better job teaching youth the best and most up-to-date technical skills, they need to teach youth better soft skills. That was made clear by the last post. However, that only tells half the story. Employers also need to be better recipients and need to adopt better practices to get the most of their new, inexperienced youth employees.

To better understand some of these issues, we asked employers and human resource experts what they thought.

What happens when youth start working?

Youth are looking for employment that offers stability, a decent wage, and job security. In the hope of finding work youth end up moving to locations where multiple different companies have operations.

So in the communities that surround factories, word of job openings spreads quickly.

There are ads and posters for jobs, but the most successful way to find work, and the most trusted method by employers, is still through informal networks. Word of mouth moves quicker and more reliably than posters or online ads. So in the communities that surround factories, word of job openings spreads quickly.

The major problem with this method of finding workers is that there’s no guarantee of the quality of worker the employer might be getting. There’s no connection to a skills training program, nor to a program that gives certificates. But some employers say that these aren’t that useful anyways. Generally, the skills training programs don’t teach skills that are specific enough to the type of factory they end up working, or are too specific and outdated to be applicable in the relevant industries. Some employers do look for certifications, but generally they look for workers who are qualified to use specific machines. Operating a boiler requires certification, since a boiler is a large investment and they don’t want just anyone operating it.

One option to address this skills shortage is to create smaller, more specialised programs. They would be a quicker way to obtain certification to work in specific industries, such as retail, customer service, or manufacturing. The programs wouldn’t teach the entire breadth of technical skills though. Generally, employers prefer to train new employees in-house. However, an option like this only acts as a temporary solution.

The real skills shortage

Employers are having more of a challenge with the shortage of what are called soft skills. Workers are coming to work in factories, and may have some technical skills, or knowledge about factory machinery, but they don’t know about how to work in a factory.

Youth who enter the workplace often lack the ability to manage teams of workers, even if they excel in the technical work.

When we talked with factory owners, they were concerned that workers were often wandering around when they should be at their workstation, or they are found smoking inside the factory. Generally, they don’t know how to operate in a factory work environment. The work culture isn’t there.

The soft skills shortage also manifests itself in a shortage of leadership and management skills. Youth who enter the workplace often lack the ability to manage teams of workers, even if they excel in the technical work. Not having these leadership qualities is hurting businesses as line workers are being promoted to supervisors, and makes the job of the employer that much more difficult when they are looking to promote someone to a more managerial position. Without these soft skills, factories are not producing at optimal output. Businesses lose out in the end, and the workers are stuck in jobs that aren’t improving their condition because they aren’t receiving the right training and guidance from their supervisors or from management.

Good workers don’t always make good managers

If it was that easy. Identifying workers who possess those leadership skills is very difficult, especially if their work day consists of technical tasks. The only reliable metric employers have is technical performance. Unfortunately, technical performance doesn’t always translate to management performance. Even though they have the skills to work on the line, doesn’t mean they have the ability to train those skills.

… employers are unwilling to invest in workforce development because they don’t see a return on this investment

So the discussion is instead focused on how to prepare workers for becoming supervisors. There are two opinions on how to do this. Workers either lack the knowledge or capacity to adapt to the workplace culture. They lack the skills necessary to manage people. Therefore, the appropriate response is to hire supervisors who already have that kind of experience, or require a certain degree of education for that position.

Conversely, others are of the opinion that workers don’t lack some sort of soft skills capacity, but that the requisite training hasn’t been sufficient. Employers have possibly invested in training before, but because the training methodologies are out of date, they didn’t see the desired results. They argue that employers are unwilling to invest in workforce development because they don’t see a return on this investment. Therefore, there needs to be better training programs that build their program around employer and workplace demand.

Both perspectives suggest different solutions. Employers aren’t against investing into their workforce, but employers are worried that employees will change jobs quickly, or that it won’t sufficiently improve the capabilities of the worker. In these cases, investing in the workforce doesn’t seem to have the desired payoff.

Having the wrong perspective

Employers face many challenges in their workplace, from technical skills shortages, to having difficulty instilling workplace values in their workers. The challenges they face are legitimate, and important, but there is a bigger issue. The problem goes much deeper than a skills shortage, or a hesitation to invest in training for workers. The paradigm that informs how skills training programs and employers approach workforce development doesn’t guarantee sufficient workforce development.

What we mean is that while employers face challenges with inadequate workforces, and in some instances high turnover, the solutions seem too costly and inefficient. Instead of investing in workforce development solutions, employers are comfortable with high turnover and lower worker productivity, as long as costs are low. The evidence suggests otherwise.

Looking at businesses across multiple industries, the best performers were the ones who invested heavily into worker wages, skills, and cross-training. As those businesses did that, their turnover dropped significantly, workers were happier, and profits went up.

Youth that feel as though their employers are investing into them are more likely to remain loyal to the company.

However, we can’t place the burden solely on employers. Skills training programs, and the organisations that invest in workforce development, need to be willing to better consult with employers. They need to allow the demand side of the labour market to shape skills training. We need to encourage employers to be more ambitious but we need to structure skills training, vocational training, and better prepare the workforce in a way that caters to the needs of employers so that they can reach that potential. This requires a wholesale paradigm shift towards a demand-led labour market strategy.

So what needs to happen?

So how is this demand-led approach attained? Employers need to invest more into their young workforce, that much is clear. The evidence shows that companies that invest into broader training programs that teach workplace skills, work culture, leaderships and management skills, and offer cross-training services have lower turnover and higher productivity. Youth that feel as though their employers are investing into them are more likely to remain loyal to the company. Training needs to reflect that need, and organisations should better tailor training programs to that end.

The real question is how to make that change. There needs to be more reasons to invest in workforce development, from government or other relevant organisations. In order to achieve that end, there either needs to be a more cohesive ministry or department to oversee human resource development or more support organisations for employers around workforce development and human resource development.

Either body could advocate for increasing investment into workforce development from a demand-led perspective. It would be important in the long run to advocate for such a system so that better workforce development practices could be institutionalised. This would be especially important as compliance becomes an increasingly important issue in Bangladesh.

The strongest suggestion we can make is for more communication between employers, and more communication between analysts and employers. That’s why we’ve begun interviewing employers and other industry experts. In order to better craft programs that address issues in the labour market, and better access the potential of employers and youth at work, rethinking the employment paradigm is where to start.

Data can get us to a certain point of understanding. By communicating with employers, a new model for understanding employers needs and pointing out the potential of workforce development can be developed. This is the next step for Quay Asia.

Conclusion

In this first series we highlighted the importance of the demographic dividend, and the role that youth would play in the future. Bangladesh is in a unique position to make the most of its future, but that requires investing into the people that will shape it. Youth and employers face many challenges going forward, which necessitates a more organised effort to address the current issues in the labour market.

Skills shortages, the lack of an efficient training system, and the hesitance of employers to invest in workforce development are the effects of the current labour market paradigm. In order to help youth make the most of their transition to work, more needs to be done to prepare them for work, and to prepare them to lead. Youth and employers must be in this together to take advantage of this unique moment.

Our key informants

Syed Uddin, Managing Director at MAAR (Maize Advanced Agro Refinery) Limited

Ziaur Rahman, Managing Director of Bay Group

Parveen Huda, Managing Director at Renaissance Consultants Ltd.

Tom Zizys – Labour Market Expert from Ontario, Canada